1011-00002 · Meridian Consumer Brands LLC · Court Filings & Demands

dip-financing-limited-objection.docx DOCUMENT Finance & Banking

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UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

¹ The last four digits of the Debtor's federal tax identification number are 7214. The Debtor's mailing address is 1200 NW Everett Street, Suite 800, Portland, OR 97209.

LIMITED OBJECTION AND RESERVATION OF RIGHTS OF MERIDIAN CONSUMER BRANDS LLC TO DEBTOR'S MOTION FOR APPROVAL OF DEBTOR-IN-POSSESSION FINANCING

Meridian Consumer Brands LLC ("Meridian" or "MCB"), a Delaware limited liability company, by and through its undersigned counsel, Calderwood & Harkness LLP, hereby files this Limited Objection and Reservation of Rights (the "Objection") to the Debtor's Motion for Entry of Interim and Final Orders (I) Authorizing the Debtor to Obtain Postpetition Financing, (II) Granting Liens and Superpriority Administrative Expense Claims, (III) Authorizing the Use of Cash Collateral, (IV) Granting Adequate Protection, and (V) Granting Related Relief [Dkt. No. __] (the "DIP Motion"), and respectfully states as follows:

I. PRELIMINARY STATEMENT

1. Meridian Consumer Brands LLC is a Delaware limited liability company headquartered at 575 Lexington Avenue, 22nd Floor, New York, New York 10022. Meridian is a leading designer, manufacturer, and distributor of home décor, kitchen, and lifestyle consumer products sold through major retail channels across the United States and internationally. Meridian reported fiscal year 2024 revenue of approximately $1.24 billion and EBITDA of approximately $167 million. Meridian is a portfolio company of Briarstone Capital Partners Fund IV, LP, which holds an approximately 78% equity interest in Meridian, acquired in 2021 for approximately $680 million.

2. Meridian is one of the largest unsecured trade creditors of Cascadia Home & Lifestyle Inc. (the "Debtor" or "CHL"), holding approximately $14,726,418.37 in pre-petition trade receivables, comprised of eighty-three (83) unpaid invoices dated between July 18, 2025 and October 10, 2025. The Debtor has historically been one of Meridian's top-five retail customers, accounting for approximately $58.3 million in annual purchases in fiscal year 2024, making CHL Meridian's fourth-largest customer by revenue.

3. Meridian is also a duly appointed member of the Official Committee of Unsecured Creditors (the "Committee") appointed by the United States Trustee on October 28, 2025. Meridian files this Objection in its individual capacity as a major trade creditor of the Debtor. The positions set forth herein have been coordinated with, but are not duplicative of, the positions that the Committee and its counsel, Garvey & Holbrook LLP (Diana Prescott, lead partner), may take with respect to the DIP Motion. Meridian reserves all rights it holds individually and as a member of the Committee.

4. Meridian does not object to the Debtor's need for post-petition financing in principle. The Debtor operates approximately 347 retail stores across 38 states and maintains a significant e-commerce platform. CHL employs approximately 12,400 people. Meridian recognizes that the Debtor requires liquidity to continue its business operations during the Chapter 11 process, to fund ordinary-course payments to employees and vendors, and to preserve going-concern value for the benefit of all stakeholders. Meridian has a direct and substantial interest in the Debtor's continued operations, both as a major creditor seeking recovery on its pre-petition claims and as an ongoing supplier to the Debtor's retail operations.

5. Meridian's objection is limited and targeted. Certain provisions of the proposed $275 million debtor-in-possession credit facility (the "DIP Facility") are objectionable because they: (a) improperly elevate pre-petition claims to superpriority status through a $125 million roll-up of pre-petition first lien revolving credit facility obligations; (b) fail to provide adequate protection for the interests of unsecured creditors, including trade creditors holding section 503(b)(9) administrative expense claims; (c) contain overbroad release and indemnification provisions that prejudice estate causes of action before the Committee has had a meaningful opportunity to investigate; and (d) impose aggressive milestones and restrictive budget constraints that unduly limit the ability of the Debtor and the Committee to investigate and pursue alternative transactions that could maximize value for all stakeholders.

6. This Objection is filed in advance of the Final DIP Hearing, which is currently scheduled for November 14, 2025. The Court entered the Interim DIP Order on October 17, 2025 [Dkt. No. __], authorizing the Debtor to draw on a portion of the DIP Facility on an interim basis. Meridian respectfully submits that the provisions identified herein should be denied, modified, or conditioned in the Final DIP Order to protect the interests of unsecured creditors and to preserve the integrity of the Chapter 11 process.

II. BACKGROUND

A. The Chapter 11 Case

7. Cascadia Home & Lifestyle Inc. filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the "Bankruptcy Code"), on October 14, 2025 (the "Petition Date"). The Debtor is a Delaware corporation headquartered at 1200 NW Everett Street, Suite 800, Portland, Oregon 97209.

8. CHL was founded in 1994 by Roland Trask as a specialty retailer of home furnishings and lifestyle products. The company conducted an initial public offering in 2006 and was listed on the New York Stock Exchange. In 2019, the Debtor was taken private by Pinecrest Equity Group in a leveraged buyout valued at approximately $2.1 billion. In connection with the leveraged buyout, Pinecrest Equity Partners III, LP contributed approximately $740 million in equity, with the balance financed through a combination of first lien and second lien secured debt. The capital structure resulting from the 2019 leveraged buyout, and the significant debt burden it imposed on CHL's operations, are matters of considerable importance to Meridian and the Committee, as discussed further below.

9. The Debtor's current management team includes Margaret "Meg" Fontaine, Chief Executive Officer; Vikram Patel, Chief Financial Officer; and Philip Kellner, Chief Restructuring Officer. Mr. Kellner was engaged through Kellner & Associates LLC in connection with the Debtor's restructuring efforts in the months leading up to the Petition Date.

10. The Debtor is represented in this Chapter 11 case by Brindoval Baines & Lord LLP (Harrison Caldwell, lead restructuring partner) as lead restructuring counsel, with Borwick Sato LLP (Michael Donnelly) serving as Delaware co-counsel. Ashworth Partners LLC (Sandra Ng, lead managing director) serves as the Debtor's financial advisor and investment banker.

11. The Debtor's financial performance has deteriorated significantly in recent years. For the fiscal year ending January 31, 2025, the Debtor reported revenue of approximately $1.87 billion, a net loss of approximately $214 million, and negative EBITDA of approximately ($42 million). The Debtor has struggled with declining foot traffic at its brick-and-mortar retail locations, margin compression driven by rising supply chain costs, inventory management challenges, and an overleveraged capital structure that has consumed cash flow and limited the Debtor's ability to invest in its business and adapt to evolving consumer preferences.

B. The Debtor's Pre-Petition Capital Structure

12. As of the Petition Date, the Debtor's funded debt obligations totaled approximately $1.379 billion, consisting of the following:

(a) First Lien Revolving Credit Facility. A $225 million revolving credit facility, of which approximately $189 million was drawn as of the Petition Date. The administrative agent for the first lien facilities is Ridgeline National Bank, N.A. (Laura Chin, workout officer), located at 600 Travis Street, Houston, Texas 77002.

(b) First Lien Term Loan B. A term loan with approximately $625 million outstanding as of the Petition Date, reduced from original principal of $700 million through scheduled amortization payments. The first lien term loan shares the same collateral package and administrative agent as the revolving credit facility.

(d) Second Lien Term Loan. A second lien term loan with approximately $350 million outstanding as of the Petition Date. Thornfield Capital Management LP (Alan Reeves, portfolio manager), located at 9 West 57th Street, 34th Floor, New York, New York 10019, holds a significant position in the second lien debt and acts as administrative agent for the second lien facility.

(e) 8.75% Senior Unsecured Notes due 2027. Approximately $215 million in aggregate principal amount of senior unsecured notes outstanding as of the Petition Date. Pacific Continental Trust Company, located at 101 Barclay Street, 7th Floor, New York, New York 10286, serves as indenture trustee for the unsecured notes.

(f) Total Funded Debt. Approximately $1.379 billion.

13. In addition to the Debtor's funded debt obligations, the Debtor's schedules and statements filed in this case estimate total unsecured claims, including trade claims, lease rejection claims, litigation claims, and other general unsecured claims, in the range of $180 million to $220 million. The sheer magnitude of the Debtor's funded indebtedness relative to its asset values and operating performance underscores the importance of the issues raised in this Objection.

C. The Proposed DIP Facility

14. On October 15, 2025, the Debtor filed the DIP Motion seeking authority to enter into a senior secured, superpriority debtor-in-possession credit facility in an aggregate principal amount of $275 million. The material terms of the proposed DIP Facility, as relevant to this Objection, are as follows:

(a) Facility Size. $275 million, consisting of $150 million in new money advances and a $125 million roll-up of pre-petition first lien revolving credit facility obligations.

(b) DIP Agent. Ridgeline National Bank, N.A., which is also the administrative agent for the pre-petition first lien credit facilities.

(c) Priority and Security. The DIP Facility is afforded superpriority administrative expense claim status under section 364(c)(1) of the Bankruptcy Code, senior to all other administrative expense claims (except for certain carved-out amounts). The DIP obligations are secured by first-priority liens on all of the Debtor's assets, including priming liens on collateral subject to pre-petition liens, pursuant to sections 364(c)(2), 364(c)(3), and 364(d) of the Bankruptcy Code.

(d) Roll-Up. Upon entry of the Final DIP Order, $125 million of the Debtor's pre-petition first lien revolving credit facility obligations will be "rolled up" into the DIP Facility and will be deemed DIP obligations entitled to the same superpriority status, liens, and protections as the new money DIP obligations.

(e) Interest Rate. SOFR plus 450 basis points, with a 1.00% SOFR floor, payable monthly in cash.

(f) Maturity. The earliest of (i) twelve (12) months from the date of entry of the Final DIP Order, (ii) the effective date of a plan of reorganization, or (iii) the consummation of a sale of substantially all of the Debtor's assets under section 363 of the Bankruptcy Code.

(g) Case Milestones. The DIP credit agreement contains a series of milestones governing the progress of the Chapter 11 case, including deadlines for the filing of a plan of reorganization or the commencement of a section 363 sale process.

(h) Budget. The DIP Facility requires the Debtor to operate within a court-approved budget, subject to certain permitted variances, with budget compliance tested on a rolling basis.

15. The Court entered the Interim DIP Order on October 17, 2025 [Dkt. No. __], authorizing the Debtor to borrow up to a specified amount on an interim basis pending the Final DIP Hearing. The Final DIP Hearing is currently scheduled for November 14, 2025.

D. Meridian's Claims and Status

16. As set forth above, Meridian holds approximately $14,726,418.37 in pre-petition trade receivables against the Debtor, representing eighty-three (83) unpaid invoices spanning the period from July 18, 2025 through October 10, 2025. The oldest outstanding invoice is Invoice MCB-092174, dated July 18, 2025, in the amount of $212,600.00. The most recent unpaid pre-petition invoice is Invoice MCB-095301, dated October 10, 2025, in the amount of $187,440.50.

17. In addition to its general unsecured trade receivable claim, Meridian has asserted a section 503(b)(9) administrative expense claim in the amount of approximately $1,847,200.00 for goods received by the Debtor in the ordinary course of the Debtor's business within twenty (20) days before the Petition Date — i.e., goods received by the Debtor between September 24, 2025 and October 14, 2025. These goods were shipped, delivered, and received in the ordinary course of the parties' longstanding commercial relationship.

18. Meridian has also asserted reclamation rights under section 546(c) of the Bankruptcy Code with respect to approximately $3,218,650.00 in goods delivered to the Debtor within the forty-five (45) day period preceding the Petition Date — i.e., goods delivered between August 30, 2025 and October 14, 2025. Meridian timely provided the Debtor with written notice of its reclamation demand in accordance with section 546(c).

19. In connection with its "first day" motions, the Debtor designated Meridian as a "critical vendor" eligible for a proposed payment of $2,500,000 of its pre-petition claims. Meridian's response to the Debtor's critical vendor proposal is pending, and Meridian reserves all rights with respect thereto.

20. Meridian maintains trade credit insurance through Clearwater Surety & Insurance Co. under Policy No. TCI-2024-00783. The policy provides a Cascadia-specific sub-limit of $5,000,000, subject to a 10% co-insurance retention of $500,000, yielding net expected coverage of $4,500,000. After application of the expected insurance proceeds, Meridian faces an uninsured claim balance of approximately $10,226,418.37 — a material exposure that Meridian seeks to protect through this Objection and its participation in this case.

21. Meridian was appointed to the Official Committee of Unsecured Creditors on October 28, 2025. The other members of the Committee include:

(a) Wavecrest Logistics Corp. (claim approximately $9.1 million);

(b) Summit Packaging Solutions Inc. (claim approximately $6.4 million);

(d) Northstar Textiles Ltd. (claim approximately $11.3 million); and

(e) Redmond & Park Advertising LLC (claim approximately $4.8 million).

22. The Committee has retained Garvey & Holbrook LLP (Diana Prescott, lead partner) as counsel and Broadleaf Advisory Group LLC (Robert Tanaka, managing director) as financial advisor, subject to Court approval of the retention applications. The Committee's professionals have been working diligently since their engagement to review the DIP Facility, investigate the Debtor's pre-petition transactions, and develop positions for the benefit of unsecured creditors.

III. OBJECTION

Meridian respectfully submits that the following provisions of the proposed DIP Facility and Final DIP Order are objectionable and should be denied, modified, or conditioned as set forth herein.

A. The $125 Million Roll-Up Improperly Elevates Pre-Petition Claims to Superpriority Status

23. The proposed DIP Facility includes a $125 million roll-up component (the "Roll-Up") that, upon entry of the Final DIP Order, would convert $125 million of pre-petition first lien revolving credit facility claims held by Ridgeline National Bank, N.A. and the other pre-petition revolving credit facility lenders into DIP obligations. Once rolled up, these pre-petition claims would be entitled to the same superpriority administrative expense status and first-priority DIP liens as the $150 million in new money DIP advances. The effect of the Roll-Up is to transform $125 million of pre-petition secured claims — claims that would otherwise be treated as secured claims under a plan of reorganization, subject to the requirements of section 1129 of the Bankruptcy Code and the protections afforded to junior creditors — into claims with a structural priority superior to all other claims in this case.

24. The Roll-Up is objectionable for several reasons.

25. First, the Roll-Up constitutes an improper sub rosa restructuring of the Debtor's capital structure at the very outset of this case. By elevating $125 million in pre-petition secured claims to superpriority DIP status, the proposed DIP Facility effectively predetermines the outcome of the reorganization process in favor of the pre-petition first lien lenders before the Committee or any other interested party has had a meaningful opportunity to analyze the Debtor's capital structure, investigate the circumstances surrounding the 2019 leveraged buyout and subsequent financings, or evaluate potential claims against the pre-petition lenders. Courts in this District and elsewhere have recognized that roll-ups of pre-petition debt into DIP facilities raise significant concerns and should be subjected to heightened scrutiny. See, e.g., In re Lyondell Chem. Co., 402 B.R. 571 (Bankr. S.D.N.Y. 2009); In re Ames Dep't Stores, Inc., 115 B.R. 34 (Bankr. S.D.N.Y. 1990). The Court should not approve a roll-up of this magnitude without assurance that the estate's ability to challenge the underlying pre-petition claims is preserved.

26. Second, the Roll-Up effectively promotes $125 million of Ridgeline's pre-petition secured claims — which were already secured by substantially all of the Debtor's assets under the pre-petition credit agreements — to a position structurally superior to all other administrative and priority claims, including section 503(b)(9) claims held by trade creditors such as Meridian. Meridian's $1,847,200 section 503(b)(9) administrative expense claim, which arises from goods received by the Debtor in the ordinary course of its business in the twenty days before the Petition Date, is directly subordinated and impaired by the Roll-Up's superpriority priming effect. Similarly, Meridian's ongoing post-petition supply arrangement with the Debtor — estimated at approximately $4.8 million per month — generates new administrative claims that are structurally junior to the rolled-up pre-petition claims. The Roll-Up thus undermines the policy underlying section 503(b)(9), which Congress enacted to encourage trade creditors to continue supplying goods to financially distressed companies by providing them with the assurance of an administrative expense priority for goods delivered in the twenty-day period before bankruptcy.

27. Third, the Roll-Up was negotiated between the Debtor and its pre-petition first lien lender without any meaningful input from unsecured creditors. The Committee was not appointed until October 28, 2025 — fourteen days after the Petition Date and eleven days after entry of the Interim DIP Order. The unsecured creditor constituency had no voice in the negotiation of the DIP Facility, no ability to evaluate whether the Roll-Up was necessary to induce the DIP Lenders to extend new money, and no opportunity to propose alternative structures or competing DIP proposals. Under these circumstances, the Court should not permit the wholesale conversion of $125 million in pre-petition claims to superpriority status.

28. Fourth, there has been no demonstration that the Roll-Up is necessary to secure the DIP financing on terms favorable to the estate. The Debtor has not shown that Ridgeline would not have agreed to provide $150 million in new money DIP financing without the Roll-Up, or that alternative DIP financing proposals were solicited and proved unavailable. Without such a showing, the Roll-Up amounts to a windfall for the pre-petition revolving credit facility lenders at the direct expense of unsecured creditors.

29. Requested Relief. For the foregoing reasons, Meridian respectfully requests that the Court either (i) deny the Roll-Up in its entirety and approve only the $150 million new money component of the DIP Facility, or (ii) in the alternative, limit the Roll-Up to an amount that reflects the actual new money extended, with appropriate conditions protecting the estate's ability to challenge the validity, extent, and priority of the pre-petition liens, including a meaningful challenge period of not less than seventy-five (75) days from the date on which the Committee's professionals are retained and authorized to conduct their investigation.

B. The DIP Facility Fails to Provide Adequate Protection for Unsecured Creditors

30. While the DIP Motion and the proposed Final DIP Order provide elaborate adequate protection for the pre-petition secured lenders — including replacement liens, superpriority administrative expense claims, current-pay interest, payment of professional fees of the secured lenders' advisors, and other protections — the DIP Facility provides no adequate protection whatsoever for the interests of unsecured creditors.

31. The absence of any meaningful protections for unsecured creditors is particularly troubling in light of the Debtor's financial condition. The Debtor's total funded debt of approximately $1.379 billion already exceeds any reasonable going-concern valuation of the Debtor's assets. The Debtor's fiscal year 2024 financial results — including negative EBITDA of ($42 million) and a net loss of $214 million — indicate that the Debtor's enterprise value is substantially below the face amount of its secured indebtedness. The addition of a $275 million superpriority DIP facility, with $125 million in rolled-up pre-petition claims, further erodes any potential recovery for unsecured creditors, whose estimated claims pool is in the range of $180 million to $220 million. Under these circumstances, the unsecured creditor constituency is at serious risk of receiving little or no recovery, and the proposed DIP Facility exacerbates that risk without providing any offsetting protections.

32. Trade creditors such as Meridian are uniquely harmed by the absence of adequate protections in the DIP Facility. Unlike bondholders or financial creditors who may adjust their positions through trading, trade creditors are locked into their claims and are being asked to continue to supply goods to the Debtor on a post-petition basis. Meridian's ongoing supply arrangement with the Debtor generates new administrative claims at an estimated rate of approximately $4.8 million per month. These post-petition administrative claims are structurally junior to the DIP superpriority claims and the rolled-up pre-petition claims, creating a situation in which Meridian is effectively subsidizing the Debtor's operations for the benefit of the secured lenders while bearing a disproportionate share of the risk.

33. Moreover, the proposed DIP budget does not appear to carve out sufficient funds for the payment of section 503(b)(9) administrative expense claims or for critical vendor payments that have been approved or may be approved by the Court. Meridian's section 503(b)(9) claim of approximately $1,847,200.00 and its potential critical vendor payment of $2,500,000 are both directly at risk if the DIP budget does not adequately provide for these obligations.

34. Requested Relief. Meridian respectfully requests that the Final DIP Order include the following protections for unsecured creditors:

(i) A professional fee carve-out sufficient to fund the Committee's investigation of the Debtor's pre-petition transactions, including the 2019 leveraged buyout, subsequent dividend recapitalizations, and the validity and extent of the pre-petition liens;

(ii) A specific carve-out or reserve for the payment of allowed section 503(b)(9) administrative expense claims, to be funded from DIP proceeds or other estate assets and not subject to the DIP Lender's discretion;

(iii) A requirement that the DIP budget include sufficient funds for critical vendor payments approved by the Court, including any payment approved for Meridian, and that such payments not be subject to the DIP Lender's consent;

(iv) A challenge period of no less than seventy-five (75) days from the date on which the Committee retains professionals to investigate the validity, extent, and priority of the pre-petition liens and the pre-petition secured lenders' claims, during which period the stipulations and findings regarding the pre-petition liens contained in the DIP Order shall not be binding on the Committee or any party other than the Debtor; and

(v) Such other adequate protections as the Court deems appropriate to ensure that the interests of unsecured creditors are not unfairly prejudiced by the DIP Facility.

C. The Proposed Release and Indemnification Provisions Prejudice Estate Causes of Action

35. The DIP Motion and the proposed Final DIP Order contain broad release and indemnification provisions (the "Release Provisions") that purport to release the DIP Agent, the DIP Lenders, and their respective affiliates, officers, directors, employees, agents, advisors, attorneys, and other representatives from any and all claims, causes of action, and liabilities arising out of or relating to the DIP Facility, the pre-petition credit facilities, or any actions taken in connection therewith. The Release Provisions also purport to require the estate to indemnify and hold harmless these parties from any claims or liabilities arising from or related to the DIP Facility or the pre-petition credit facilities.

36. These Release Provisions are objectionable because they would effectively bar the estate, the Committee, and individual creditors from pursuing potential avoidance actions, lender liability claims, equitable subordination claims, breach of fiduciary duty claims, fraudulent transfer claims, or other causes of action against Ridgeline National Bank, N.A. and its affiliates and related parties. The scope of the proposed releases is sweeping: by their terms, the releases would cover not only claims arising from the DIP Facility itself but also claims arising from or relating to the pre-petition credit facilities. This breadth is particularly concerning given the significant issues that the Committee has identified for investigation, including:

(a) Whether the 2019 leveraged buyout, in which Pinecrest Equity Partners III, LP contributed approximately $740 million in equity and financed the approximately $1.36 billion balance through secured debt, may have left the Debtor inadequately capitalized and constituted a constructive fraudulent transfer;

(b) Whether any dividend recapitalizations or distributions to equity holders following the 2019 leveraged buyout may constitute avoidable transfers under sections 544, 548, or 550 of the Bankruptcy Code;

(c) Whether the pre-petition first lien lenders, including Ridgeline National Bank, N.A. in its capacity as administrative agent, engaged in conduct that could give rise to equitable subordination claims under section 510(c) of the Bankruptcy Code;

(d) Whether the pre-petition liens were properly perfected and are subject to challenge under applicable state law or the Bankruptcy Code; and

(e) Whether any insider transactions, related-party dealings, or preferential transfers occurred in the period preceding the Petition Date.

37. The concern regarding the Release Provisions is heightened by the dual role of Ridgeline National Bank, N.A. in this case. Ridgeline served as the administrative agent for the pre-petition first lien credit facilities, with approximately $814 million in first lien debt outstanding as of the Petition Date. Ridgeline is now serving as the DIP Agent for the proposed DIP Facility. This dual role creates an inherent conflict of interest and underscores the need for the Committee to conduct a thorough and independent investigation of the pre-petition lending relationship before any releases are granted. The Release Provisions, as currently drafted, would foreclose this investigation by releasing Ridgeline and its affiliates before the Committee has even completed its retention of professionals.

38. The Committee was appointed only on October 28, 2025 — two weeks after the Petition Date — and has not yet had a meaningful opportunity to investigate potential estate claims against the pre-petition lenders or the Debtor's equity sponsor, Pinecrest Equity Group and its affiliates. Applications to retain the Committee's counsel, Garvey & Holbrook LLP, and financial advisor, Broadleaf Advisory Group LLC, remain pending before this Court. It would be fundamentally unfair and prejudicial to the estate and its creditors to approve broad releases of the pre-petition lenders at this early stage of the case, before the Committee's professionals have had any opportunity to review documents, conduct examinations, or assess the merits of potential claims.

39. Requested Relief. Meridian respectfully requests that all release provisions in the Final DIP Order be subject to a meaningful challenge period and explicitly preserve the right of the estate, the Committee, and individual creditors to investigate and prosecute claims against the pre-petition lenders and their affiliates, including Ridgeline National Bank, N.A., Pinecrest Equity Group and its affiliated funds (including Pinecrest Equity Partners III, LP), and any other parties that may be subject to estate claims. Specifically, the Final DIP Order should provide that:

(i) No releases shall be effective with respect to claims or causes of action arising out of or relating to the pre-petition credit facilities or the pre-petition period until the expiration of a challenge period of no less than seventy-five (75) days from the date on which the Committee's professionals are authorized to commence their investigation;

(ii) The releases, to the extent approved, shall not cover claims for gross negligence, willful misconduct, fraud, or bad faith;

(iii) The indemnification provisions shall not require the estate to indemnify any released party for losses arising from the released party's own gross negligence, willful misconduct, fraud, or bad faith; and

(iv) The releases and indemnification provisions shall be without prejudice to the rights of the Committee or any other party in interest to seek modification or revocation of the releases upon a showing of cause.

D. Milestones and Budget Constraints Unduly Limit Investigation of Alternative Transactions

40. The proposed DIP Facility imposes aggressive case milestones (the "Milestones") that govern the pace and direction of the Chapter 11 case. These Milestones include, among other things, deadlines for the filing of a plan of reorganization or the commencement of a section 363 sale process, deadlines for obtaining Court approval of key case milestones, and strict budget compliance covenants that require the Debtor to operate within a court-approved budget, subject to limited permitted variances.

41. While Meridian acknowledges that reasonable milestones can serve a legitimate purpose in ensuring that Chapter 11 cases proceed in a timely and efficient manner, the Milestones proposed in this case go beyond what is reasonable and effectively give the DIP Lender — Ridgeline National Bank, N.A. — undue control over the pace and direction of the restructuring process. This control comes at the expense of the Debtor's ability to maximize the value of the estate and the Committee's ability to fulfill its statutory obligations under section 1103 of the Bankruptcy Code.

42. Specifically, the Milestones and budget constraints limit the Debtor's and the Committee's ability to:

(i) Investigate the Debtor's pre-petition transactions, including the 2019 leveraged buyout and any subsequent dividend recapitalizations or distributions to equity holders that may constitute avoidable transfers;

(ii) Pursue alternative restructuring proposals, competing DIP financing, or competing bids for the Debtor's assets that could yield higher recoveries for unsecured creditors;

(iii) Negotiate plan terms that maximize recoveries for all stakeholders, including unsecured creditors, rather than terms that are predetermined by the secured lenders; and

(iv) Conduct the due diligence and analysis necessary to evaluate the merits of potential estate claims against the pre-petition lenders and the Debtor's equity sponsor.

43. The DIP maturity — the earliest of twelve (12) months from the date of entry of the Final DIP Order, the effective date of a plan of reorganization, or the consummation of a section 363 sale — combined with the tight Milestones, creates an artificially compressed timeline that benefits the secured lenders at the expense of unsecured creditors. The secured lenders have every incentive to drive toward a quick resolution that protects their claims and minimizes the time available for the Committee to investigate and assert estate claims. Unsecured creditors, by contrast, benefit from a process that allows sufficient time for a thorough investigation of the pre-petition transactions and a fair evaluation of all available restructuring alternatives.

44. Additionally, the budget constraints may not adequately fund the Committee's professional fees and expenses necessary to fulfill its statutory role. The Committee has retained, subject to Court approval, Garvey & Holbrook LLP as counsel and Broadleaf Advisory Group LLC (Robert Tanaka, managing director) as financial advisor. The Committee's professionals will require adequate funding to conduct their investigation, participate in plan negotiations, evaluate potential transactions, and otherwise discharge their fiduciary duties to the unsecured creditor constituency. A DIP budget that does not provide sufficient funding for the Committee's professionals effectively undermines the Committee's statutory role and deprives unsecured creditors of the representation to which they are entitled under the Bankruptcy Code.

45. Requested Relief. Meridian respectfully requests that the Final DIP Order include the following modifications to the Milestones and budget constraints:

(i) Extension of the case milestones to provide at least ninety (90) days from the date on which the Committee's professionals are authorized to commence their investigation before any plan filing deadline or sale process commencement deadline;

(ii) Inclusion of a professional fee carve-out of no less than $4,500,000 for Committee professionals, inclusive of fees and expenses for the Committee's counsel and financial advisor, which carve-out shall not be subject to reduction or elimination by the DIP Lender without further order of this Court;

(iii) A requirement that the DIP Lender consent (such consent not to be unreasonably withheld, conditioned, or delayed) to budget modifications reasonably necessary to fund estate-value-maximizing investigations, including investigations of potential avoidance actions, lender liability claims, and other estate causes of action;

(iv) Preservation of the Committee's right to seek approval of alternative DIP financing or to propose competing transactions, including the right to market the DIP opportunity to third-party lenders without interference from the existing DIP Lender; and

(v) A requirement that any termination of the DIP Facility by the DIP Lender based on a milestone default be subject to notice and a hearing before this Court, with the Debtor and the Committee having the right to be heard on the propriety of any such termination.

IV. RESERVATION OF RIGHTS

46. Meridian Consumer Brands LLC expressly reserves all of its rights, claims, and defenses, including but not limited to:

(a) Its pre-petition trade receivable claim of $14,726,418.37 across eighty-three (83) unpaid invoices, and all rights to assert, prove, and collect such claim in full;

(b) Its section 503(b)(9) administrative expense claim of $1,847,200.00 for goods received by the Debtor in the ordinary course of the Debtor's business within twenty (20) days before the Petition Date;

(c) Its reclamation rights under section 546(c) of the Bankruptcy Code for approximately $3,218,650.00 in goods delivered to the Debtor within forty-five (45) days before the Petition Date;

(d) Its right to assert all available defenses to any preference action that may be commenced against Meridian under section 547 of the Bankruptcy Code, including without limitation the ordinary course of business defense under section 547(c)(2), the contemporaneous exchange defense under section 547(c)(1), the new value defense under section 547(c)(4), and any other defense available under applicable law;

(e) Its rights as a duly appointed member of the Official Committee of Unsecured Creditors, including all rights arising under sections 1102 and 1103 of the Bankruptcy Code;

(f) Its rights under its trade credit insurance policy with Clearwater Surety & Insurance Co. (Policy No. TCI-2024-00783), including the right to make claims thereunder and to receive insurance proceeds without setoff, deduction, or other impairment;

(g) Its right to object to any plan of reorganization or disclosure statement that does not provide adequate recovery to unsecured creditors;

(h) Its right to participate in any sale process conducted under section 363 of the Bankruptcy Code, including the right to object to the terms of any proposed sale, to submit qualifying bids, and to participate in any auction;

(i) Its right to seek relief from the automatic stay under section 362 of the Bankruptcy Code if appropriate circumstances arise;

(j) Its right to assert setoff rights under section 553 of the Bankruptcy Code; and

(k) All other rights, claims, and defenses available to Meridian under the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and applicable nonbankruptcy law.

47. Meridian further reserves the right to supplement this Objection and to present additional evidence and argument at the Final DIP Hearing scheduled for November 14, 2025, or at any subsequent hearing. Meridian's professionals are continuing their review of the DIP Facility documents, the Debtor's pre-petition financial records, and other materials relevant to the issues raised herein. Meridian reserves the right to raise additional objections or modify the relief requested herein based on its ongoing review.

48. Nothing in this Objection shall be construed as a waiver of any of Meridian's rights as a creditor, a member of the Committee, or otherwise. Nothing herein shall be deemed an acknowledgment of the validity, extent, priority, or perfection of the DIP Lender's or the pre-petition secured lenders' liens, claims, or security interests, all of which remain subject to investigation by the Committee and challenge by appropriate parties in interest.

V. CONCLUSION AND REQUESTED RELIEF

WHEREFORE, for the foregoing reasons, Meridian Consumer Brands LLC respectfully requests that this Court:

1. Deny or modify the $125 million Roll-Up provision of the DIP Facility, either by eliminating the Roll-Up in its entirety or by conditioning the Roll-Up on appropriate protections for the estate and unsecured creditors, including a meaningful challenge period;

2. Include adequate protections for unsecured creditors in the Final DIP Order, including a specific reserve for payment of allowed section 503(b)(9) administrative expense claims, a carve-out for critical vendor payments approved by the Court, and a sufficient professional fee carve-out for the Committee and its professionals;

3. Strike or materially limit the release and indemnification provisions to preserve estate causes of action, provide a meaningful challenge period of no less than seventy-five (75) days, and ensure that the Committee and other parties in interest retain the ability to investigate and prosecute claims against the pre-petition lenders, the DIP Agent, and their respective affiliates;

4. Modify the case milestones and budget constraints to provide the Debtor and the Committee adequate time and resources to investigate pre-petition transactions, pursue value-maximizing alternatives, and fulfill their respective obligations under the Bankruptcy Code; and

5. Grant such other and further relief as the Court deems just and proper.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Colette Whitman (Del. Bar No. 5847) Nathaniel Bower (Del. Bar No. 6193) Nathan Ikeda (Del. Bar No. 6512) Gabrielle Moss (Del. Bar No. 6734)

200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 555-4000 Facsimile: (212) 555-4001

— and —

1105 N. Market Street, Suite 1400 Wilmington, Delaware 19801 Telephone: (302) 555-7800 Facsimile: (302) 555-7801

Counsel for Meridian Consumer Brands LLC

Dated: November __, 2025 Wilmington, Delaware

CERTIFICATE OF SERVICE

I, Nathan Ikeda, hereby certify that on November __, 2025, a true and correct copy of the foregoing Limited Objection and Reservation of Rights of Meridian Consumer Brands LLC to Debtor's Motion for Approval of Debtor-in-Possession Financing was served via the Court's CM/ECF system on all parties registered to receive electronic notices in this case, and by electronic mail and/or first-class mail, postage prepaid, on the following parties:

1. Brindoval Baines & Lord LLP

Attn: Harrison Caldwell

51 West 52nd Street New York, New York 10019 Counsel for the Debtor

2. Borwick Sato LLP

Attn: Michael Donnelly

919 N. Market Street, Suite 600 Wilmington, Delaware 19801 Delaware Co-Counsel for the Debtor

3. Ridgeline National Bank, N.A.

Attn: Laura Chin, Workout Officer

600 Travis Street Houston, Texas 77002 DIP Agent and Pre-Petition First Lien Administrative Agent

4. Garvey & Holbrook LLP

Attn: Diana Prescott

750 Third Avenue, 30th Floor New York, New York 10017 Counsel for the Official Committee of Unsecured Creditors

5. Broadleaf Advisory Group LLC

Attn: Robert Tanaka, Managing Director

1345 Avenue of the Americas, 25th Floor New York, New York 10105 Financial Advisor to the Official Committee of Unsecured Creditors

6. Ashworth Partners LLC

Attn: Sandra Ng, Lead Managing Director

399 Park Avenue, 12th Floor New York, New York 10022 Financial Advisor and Investment Banker to the Debtor

7. Thornfield Capital Management LP

Attn: Alan Reeves, Portfolio Manager

9 West 57th Street, 34th Floor New York, New York 10019 Pre-Petition Second Lien Administrative Agent

8. Pacific Continental Trust Company

101 Barclay Street, 7th Floor New York, New York 10286 Indenture Trustee for 8.75% Senior Unsecured Notes due 2027

9. Office of the United States Trustee, Region 3

844 King Street, Suite 2207 Wilmington, Delaware 19801

10. All other parties requesting notice pursuant to Federal Rule of Bankruptcy Procedure 2002.

________________________________________

Nathan Ikeda (Del. Bar No. 6512) CALDERWOOD & HARKNESS LLP 1105 N. Market Street, Suite 1400 Wilmington, Delaware 19801 Telephone: (302) 555-7800

In re:	Chapter 11
CASCADIA HOME & LIFESTYLE INC.,	Case No. 25-12087 (CMA)
Debtor.¹	Hon. Christine M. Aldridge

Related Docket No.: [Dkt. No. __]

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE
¹ The last four digits of the Debtor's federal tax identification number are 7214. The Debtor's mailing address is 1200 NW Everett Street, Suite 800, Portland, OR 97209.
LIMITED OBJECTION AND RESERVATION OF RIGHTS OF MERIDIAN CONSUMER BRANDS LLC TO DEBTOR'S MOTION FOR APPROVAL OF DEBTOR-IN-POSSESSION FINANCING
Meridian Consumer Brands LLC ("Meridian" or "MCB"), a Delaware limited liability company, by and through its undersigned counsel, Calderwood & Harkness LLP, hereby files this Limited Objection and Reservation of Rights (the "Objection") to the Debtor's Motion for Entry of Interim and Final Orders (I) Authorizing the Debtor to Obtain Postpetition Financing, (II) Granting Liens and Superpriority Administrative Expense Claims, (III) Authorizing the Use of Cash Collateral, (IV) Granting Adequate Protection, and (V) Granting Related Relief [Dkt. No. __] (the "DIP Motion"), and respectfully states as follows:
I. PRELIMINARY STATEMENT
1. Meridian Consumer Brands LLC is a Delaware limited liability company headquartered at 575 Lexington Avenue, 22nd Floor, New York, New York 10022. Meridian is a leading designer, manufacturer, and distributor of home décor, kitchen, and lifestyle consumer products sold through major retail channels across the United States and internationally. Meridian reported fiscal year 2024 revenue of approximately $1.24 billion and EBITDA of approximately $167 million. Meridian is a portfolio company of Briarstone Capital Partners Fund IV, LP, which holds an approximately 78% equity interest in Meridian, acquired in 2021 for approximately $680 million.
2. Meridian is one of the largest unsecured trade creditors of Cascadia Home & Lifestyle Inc. (the "Debtor" or "CHL"), holding approximately $14,726,418.37 in pre-petition trade receivables, comprised of eighty-three (83) unpaid invoices dated between July 18, 2025 and October 10, 2025. The Debtor has historically been one of Meridian's top-five retail customers, accounting for approximately $58.3 million in annual purchases in fiscal year 2024, making CHL Meridian's fourth-largest customer by revenue.
3. Meridian is also a duly appointed member of the Official Committee of Unsecured Creditors (the "Committee") appointed by the United States Trustee on October 28, 2025. Meridian files this Objection in its individual capacity as a major trade creditor of the Debtor. The positions set forth herein have been coordinated with, but are not duplicative of, the positions that the Committee and its counsel, Garvey & Holbrook LLP (Diana Prescott, lead partner), may take with respect to the DIP Motion. Meridian reserves all rights it holds individually and as a member of the Committee.
4. Meridian does not object to the Debtor's need for post-petition financing in principle. The Debtor operates approximately 347 retail stores across 38 states and maintains a significant e-commerce platform. CHL employs approximately 12,400 people. Meridian recognizes that the Debtor requires liquidity to continue its business operations during the Chapter 11 process, to fund ordinary-course payments to employees and vendors, and to preserve going-concern value for the benefit of all stakeholders. Meridian has a direct and substantial interest in the Debtor's continued operations, both as a major creditor seeking recovery on its pre-petition claims and as an ongoing supplier to the Debtor's retail operations.
5. Meridian's objection is limited and targeted. Certain provisions of the proposed $275 million debtor-in-possession credit facility (the "DIP Facility") are objectionable because they: (a) improperly elevate pre-petition claims to superpriority status through a $125 million roll-up of pre-petition first lien revolving credit facility obligations; (b) fail to provide adequate protection for the interests of unsecured creditors, including trade creditors holding section 503(b)(9) administrative expense claims; (c) contain overbroad release and indemnification provisions that prejudice estate causes of action before the Committee has had a meaningful opportunity to investigate; and (d) impose aggressive milestones and restrictive budget constraints that unduly limit the ability of the Debtor and the Committee to investigate and pursue alternative transactions that could maximize value for all stakeholders.
6. This Objection is filed in advance of the Final DIP Hearing, which is currently scheduled for November 14, 2025. The Court entered the Interim DIP Order on October 17, 2025 [Dkt. No. __], authorizing the Debtor to draw on a portion of the DIP Facility on an interim basis. Meridian respectfully submits that the provisions identified herein should be denied, modified, or conditioned in the Final DIP Order to protect the interests of unsecured creditors and to preserve the integrity of the Chapter 11 process.
II. BACKGROUND
A. The Chapter 11 Case
7. Cascadia Home & Lifestyle Inc. filed a voluntary petition for relief under Chapter 11 of Title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the "Bankruptcy Code"), on October 14, 2025 (the "Petition Date"). The Debtor is a Delaware corporation headquartered at 1200 NW Everett Street, Suite 800, Portland, Oregon 97209.
8. CHL was founded in 1994 by Roland Trask as a specialty retailer of home furnishings and lifestyle products. The company conducted an initial public offering in 2006 and was listed on the New York Stock Exchange. In 2019, the Debtor was taken private by Pinecrest Equity Group in a leveraged buyout valued at approximately $2.1 billion. In connection with the leveraged buyout, Pinecrest Equity Partners III, LP contributed approximately $740 million in equity, with the balance financed through a combination of first lien and second lien secured debt. The capital structure resulting from the 2019 leveraged buyout, and the significant debt burden it imposed on CHL's operations, are matters of considerable importance to Meridian and the Committee, as discussed further below.
9. The Debtor's current management team includes Margaret "Meg" Fontaine, Chief Executive Officer; Vikram Patel, Chief Financial Officer; and Philip Kellner, Chief Restructuring Officer. Mr. Kellner was engaged through Kellner & Associates LLC in connection with the Debtor's restructuring efforts in the months leading up to the Petition Date.
10. The Debtor is represented in this Chapter 11 case by Brindoval Baines & Lord LLP (Harrison Caldwell, lead restructuring partner) as lead restructuring counsel, with Borwick Sato LLP (Michael Donnelly) serving as Delaware co-counsel. Ashworth Partners LLC (Sandra Ng, lead managing director) serves as the Debtor's financial advisor and investment banker.
11. The Debtor's financial performance has deteriorated significantly in recent years. For the fiscal year ending January 31, 2025, the Debtor reported revenue of approximately $1.87 billion, a net loss of approximately $214 million, and negative EBITDA of approximately ($42 million). The Debtor has struggled with declining foot traffic at its brick-and-mortar retail locations, margin compression driven by rising supply chain costs, inventory management challenges, and an overleveraged capital structure that has consumed cash flow and limited the Debtor's ability to invest in its business and adapt to evolving consumer preferences.
B. The Debtor's Pre-Petition Capital Structure
12. As of the Petition Date, the Debtor's funded debt obligations totaled approximately $1.379 billion, consisting of the following:
(a) First Lien Revolving Credit Facility. A $225 million revolving credit facility, of which approximately $189 million was drawn as of the Petition Date. The administrative agent for the first lien facilities is Ridgeline National Bank, N.A. (Laura Chin, workout officer), located at 600 Travis Street, Houston, Texas 77002.
(b) First Lien Term Loan B. A term loan with approximately $625 million outstanding as of the Petition Date, reduced from original principal of $700 million through scheduled amortization payments. The first lien term loan shares the same collateral package and administrative agent as the revolving credit facility.
(c) Total First Lien Debt. Approximately $814 million in the aggregate.
(d) Second Lien Term Loan. A second lien term loan with approximately $350 million outstanding as of the Petition Date. Thornfield Capital Management LP (Alan Reeves, portfolio manager), located at 9 West 57th Street, 34th Floor, New York, New York 10019, holds a significant position in the second lien debt and acts as administrative agent for the second lien facility.
(e) 8.75% Senior Unsecured Notes due 2027. Approximately $215 million in aggregate principal amount of senior unsecured notes outstanding as of the Petition Date. Pacific Continental Trust Company, located at 101 Barclay Street, 7th Floor, New York, New York 10286, serves as indenture trustee for the unsecured notes.
(f) Total Funded Debt. Approximately $1.379 billion.
13. In addition to the Debtor's funded debt obligations, the Debtor's schedules and statements filed in this case estimate total unsecured claims, including trade claims, lease rejection claims, litigation claims, and other general unsecured claims, in the range of $180 million to $220 million. The sheer magnitude of the Debtor's funded indebtedness relative to its asset values and operating performance underscores the importance of the issues raised in this Objection.
C. The Proposed DIP Facility
14. On October 15, 2025, the Debtor filed the DIP Motion seeking authority to enter into a senior secured, superpriority debtor-in-possession credit facility in an aggregate principal amount of $275 million. The material terms of the proposed DIP Facility, as relevant to this Objection, are as follows:
(a) Facility Size. $275 million, consisting of $150 million in new money advances and a $125 million roll-up of pre-petition first lien revolving credit facility obligations.
(b) DIP Agent. Ridgeline National Bank, N.A., which is also the administrative agent for the pre-petition first lien credit facilities.
(c) Priority and Security. The DIP Facility is afforded superpriority administrative expense claim status under section 364(c)(1) of the Bankruptcy Code, senior to all other administrative expense claims (except for certain carved-out amounts). The DIP obligations are secured by first-priority liens on all of the Debtor's assets, including priming liens on collateral subject to pre-petition liens, pursuant to sections 364(c)(2), 364(c)(3), and 364(d) of the Bankruptcy Code.
(d) Roll-Up. Upon entry of the Final DIP Order, $125 million of the Debtor's pre-petition first lien revolving credit facility obligations will be "rolled up" into the DIP Facility and will be deemed DIP obligations entitled to the same superpriority status, liens, and protections as the new money DIP obligations.
(e) Interest Rate. SOFR plus 450 basis points, with a 1.00% SOFR floor, payable monthly in cash.
(f) Maturity. The earliest of (i) twelve (12) months from the date of entry of the Final DIP Order, (ii) the effective date of a plan of reorganization, or (iii) the consummation of a sale of substantially all of the Debtor's assets under section 363 of the Bankruptcy Code.
(g) Case Milestones. The DIP credit agreement contains a series of milestones governing the progress of the Chapter 11 case, including deadlines for the filing of a plan of reorganization or the commencement of a section 363 sale process.
(h) Budget. The DIP Facility requires the Debtor to operate within a court-approved budget, subject to certain permitted variances, with budget compliance tested on a rolling basis.
15. The Court entered the Interim DIP Order on October 17, 2025 [Dkt. No. __], authorizing the Debtor to borrow up to a specified amount on an interim basis pending the Final DIP Hearing. The Final DIP Hearing is currently scheduled for November 14, 2025.
D. Meridian's Claims and Status
16. As set forth above, Meridian holds approximately $14,726,418.37 in pre-petition trade receivables against the Debtor, representing eighty-three (83) unpaid invoices spanning the period from July 18, 2025 through October 10, 2025. The oldest outstanding invoice is Invoice MCB-092174, dated July 18, 2025, in the amount of $212,600.00. The most recent unpaid pre-petition invoice is Invoice MCB-095301, dated October 10, 2025, in the amount of $187,440.50.
17. In addition to its general unsecured trade receivable claim, Meridian has asserted a section 503(b)(9) administrative expense claim in the amount of approximately $1,847,200.00 for goods received by the Debtor in the ordinary course of the Debtor's business within twenty (20) days before the Petition Date — i.e., goods received by the Debtor between September 24, 2025 and October 14, 2025. These goods were shipped, delivered, and received in the ordinary course of the parties' longstanding commercial relationship.
18. Meridian has also asserted reclamation rights under section 546(c) of the Bankruptcy Code with respect to approximately $3,218,650.00 in goods delivered to the Debtor within the forty-five (45) day period preceding the Petition Date — i.e., goods delivered between August 30, 2025 and October 14, 2025. Meridian timely provided the Debtor with written notice of its reclamation demand in accordance with section 546(c).
19. In connection with its "first day" motions, the Debtor designated Meridian as a "critical vendor" eligible for a proposed payment of $2,500,000 of its pre-petition claims. Meridian's response to the Debtor's critical vendor proposal is pending, and Meridian reserves all rights with respect thereto.
20. Meridian maintains trade credit insurance through Clearwater Surety & Insurance Co. under Policy No. TCI-2024-00783. The policy provides a Cascadia-specific sub-limit of $5,000,000, subject to a 10% co-insurance retention of $500,000, yielding net expected coverage of $4,500,000. After application of the expected insurance proceeds, Meridian faces an uninsured claim balance of approximately $10,226,418.37 — a material exposure that Meridian seeks to protect through this Objection and its participation in this case.
21. Meridian was appointed to the Official Committee of Unsecured Creditors on October 28, 2025. The other members of the Committee include:
(a) Wavecrest Logistics Corp. (claim approximately $9.1 million);
(b) Summit Packaging Solutions Inc. (claim approximately $6.4 million);
(c) Ironwood Property Holdings LLC (aggregate lease rejection claims approximately $22 million);
(d) Northstar Textiles Ltd. (claim approximately $11.3 million); and
(e) Redmond & Park Advertising LLC (claim approximately $4.8 million).
22. The Committee has retained Garvey & Holbrook LLP (Diana Prescott, lead partner) as counsel and Broadleaf Advisory Group LLC (Robert Tanaka, managing director) as financial advisor, subject to Court approval of the retention applications. The Committee's professionals have been working diligently since their engagement to review the DIP Facility, investigate the Debtor's pre-petition transactions, and develop positions for the benefit of unsecured creditors.
III. OBJECTION
Meridian respectfully submits that the following provisions of the proposed DIP Facility and Final DIP Order are objectionable and should be denied, modified, or conditioned as set forth herein.
A. The $125 Million Roll-Up Improperly Elevates Pre-Petition Claims to Superpriority Status
23. The proposed DIP Facility includes a $125 million roll-up component (the "Roll-Up") that, upon entry of the Final DIP Order, would convert $125 million of pre-petition first lien revolving credit facility claims held by Ridgeline National Bank, N.A. and the other pre-petition revolving credit facility lenders into DIP obligations. Once rolled up, these pre-petition claims would be entitled to the same superpriority administrative expense status and first-priority DIP liens as the $150 million in new money DIP advances. The effect of the Roll-Up is to transform $125 million of pre-petition secured claims — claims that would otherwise be treated as secured claims under a plan of reorganization, subject to the requirements of section 1129 of the Bankruptcy Code and the protections afforded to junior creditors — into claims with a structural priority superior to all other claims in this case.
24. The Roll-Up is objectionable for several reasons.
25. First, the Roll-Up constitutes an improper sub rosa restructuring of the Debtor's capital structure at the very outset of this case. By elevating $125 million in pre-petition secured claims to superpriority DIP status, the proposed DIP Facility effectively predetermines the outcome of the reorganization process in favor of the pre-petition first lien lenders before the Committee or any other interested party has had a meaningful opportunity to analyze the Debtor's capital structure, investigate the circumstances surrounding the 2019 leveraged buyout and subsequent financings, or evaluate potential claims against the pre-petition lenders. Courts in this District and elsewhere have recognized that roll-ups of pre-petition debt into DIP facilities raise significant concerns and should be subjected to heightened scrutiny. See, e.g., In re Lyondell Chem. Co., 402 B.R. 571 (Bankr. S.D.N.Y. 2009); In re Ames Dep't Stores, Inc., 115 B.R. 34 (Bankr. S.D.N.Y. 1990). The Court should not approve a roll-up of this magnitude without assurance that the estate's ability to challenge the underlying pre-petition claims is preserved.
26. Second, the Roll-Up effectively promotes $125 million of Ridgeline's pre-petition secured claims — which were already secured by substantially all of the Debtor's assets under the pre-petition credit agreements — to a position structurally superior to all other administrative and priority claims, including section 503(b)(9) claims held by trade creditors such as Meridian. Meridian's $1,847,200 section 503(b)(9) administrative expense claim, which arises from goods received by the Debtor in the ordinary course of its business in the twenty days before the Petition Date, is directly subordinated and impaired by the Roll-Up's superpriority priming effect. Similarly, Meridian's ongoing post-petition supply arrangement with the Debtor — estimated at approximately $4.8 million per month — generates new administrative claims that are structurally junior to the rolled-up pre-petition claims. The Roll-Up thus undermines the policy underlying section 503(b)(9), which Congress enacted to encourage trade creditors to continue supplying goods to financially distressed companies by providing them with the assurance of an administrative expense priority for goods delivered in the twenty-day period before bankruptcy.
27. Third, the Roll-Up was negotiated between the Debtor and its pre-petition first lien lender without any meaningful input from unsecured creditors. The Committee was not appointed until October 28, 2025 — fourteen days after the Petition Date and eleven days after entry of the Interim DIP Order. The unsecured creditor constituency had no voice in the negotiation of the DIP Facility, no ability to evaluate whether the Roll-Up was necessary to induce the DIP Lenders to extend new money, and no opportunity to propose alternative structures or competing DIP proposals. Under these circumstances, the Court should not permit the wholesale conversion of $125 million in pre-petition claims to superpriority status.
28. Fourth, there has been no demonstration that the Roll-Up is necessary to secure the DIP financing on terms favorable to the estate. The Debtor has not shown that Ridgeline would not have agreed to provide $150 million in new money DIP financing without the Roll-Up, or that alternative DIP financing proposals were solicited and proved unavailable. Without such a showing, the Roll-Up amounts to a windfall for the pre-petition revolving credit facility lenders at the direct expense of unsecured creditors.
29. Requested Relief. For the foregoing reasons, Meridian respectfully requests that the Court either (i) deny the Roll-Up in its entirety and approve only the $150 million new money component of the DIP Facility, or (ii) in the alternative, limit the Roll-Up to an amount that reflects the actual new money extended, with appropriate conditions protecting the estate's ability to challenge the validity, extent, and priority of the pre-petition liens, including a meaningful challenge period of not less than seventy-five (75) days from the date on which the Committee's professionals are retained and authorized to conduct their investigation.
B. The DIP Facility Fails to Provide Adequate Protection for Unsecured Creditors
30. While the DIP Motion and the proposed Final DIP Order provide elaborate adequate protection for the pre-petition secured lenders — including replacement liens, superpriority administrative expense claims, current-pay interest, payment of professional fees of the secured lenders' advisors, and other protections — the DIP Facility provides no adequate protection whatsoever for the interests of unsecured creditors.
31. The absence of any meaningful protections for unsecured creditors is particularly troubling in light of the Debtor's financial condition. The Debtor's total funded debt of approximately $1.379 billion already exceeds any reasonable going-concern valuation of the Debtor's assets. The Debtor's fiscal year 2024 financial results — including negative EBITDA of ($42 million) and a net loss of $214 million — indicate that the Debtor's enterprise value is substantially below the face amount of its secured indebtedness. The addition of a $275 million superpriority DIP facility, with $125 million in rolled-up pre-petition claims, further erodes any potential recovery for unsecured creditors, whose estimated claims pool is in the range of $180 million to $220 million. Under these circumstances, the unsecured creditor constituency is at serious risk of receiving little or no recovery, and the proposed DIP Facility exacerbates that risk without providing any offsetting protections.
32. Trade creditors such as Meridian are uniquely harmed by the absence of adequate protections in the DIP Facility. Unlike bondholders or financial creditors who may adjust their positions through trading, trade creditors are locked into their claims and are being asked to continue to supply goods to the Debtor on a post-petition basis. Meridian's ongoing supply arrangement with the Debtor generates new administrative claims at an estimated rate of approximately $4.8 million per month. These post-petition administrative claims are structurally junior to the DIP superpriority claims and the rolled-up pre-petition claims, creating a situation in which Meridian is effectively subsidizing the Debtor's operations for the benefit of the secured lenders while bearing a disproportionate share of the risk.
33. Moreover, the proposed DIP budget does not appear to carve out sufficient funds for the payment of section 503(b)(9) administrative expense claims or for critical vendor payments that have been approved or may be approved by the Court. Meridian's section 503(b)(9) claim of approximately $1,847,200.00 and its potential critical vendor payment of $2,500,000 are both directly at risk if the DIP budget does not adequately provide for these obligations.
34. Requested Relief. Meridian respectfully requests that the Final DIP Order include the following protections for unsecured creditors:
(i) A professional fee carve-out sufficient to fund the Committee's investigation of the Debtor's pre-petition transactions, including the 2019 leveraged buyout, subsequent dividend recapitalizations, and the validity and extent of the pre-petition liens;
(ii) A specific carve-out or reserve for the payment of allowed section 503(b)(9) administrative expense claims, to be funded from DIP proceeds or other estate assets and not subject to the DIP Lender's discretion;
(iii) A requirement that the DIP budget include sufficient funds for critical vendor payments approved by the Court, including any payment approved for Meridian, and that such payments not be subject to the DIP Lender's consent;
(iv) A challenge period of no less than seventy-five (75) days from the date on which the Committee retains professionals to investigate the validity, extent, and priority of the pre-petition liens and the pre-petition secured lenders' claims, during which period the stipulations and findings regarding the pre-petition liens contained in the DIP Order shall not be binding on the Committee or any party other than the Debtor; and
(v) Such other adequate protections as the Court deems appropriate to ensure that the interests of unsecured creditors are not unfairly prejudiced by the DIP Facility.
C. The Proposed Release and Indemnification Provisions Prejudice Estate Causes of Action
35. The DIP Motion and the proposed Final DIP Order contain broad release and indemnification provisions (the "Release Provisions") that purport to release the DIP Agent, the DIP Lenders, and their respective affiliates, officers, directors, employees, agents, advisors, attorneys, and other representatives from any and all claims, causes of action, and liabilities arising out of or relating to the DIP Facility, the pre-petition credit facilities, or any actions taken in connection therewith. The Release Provisions also purport to require the estate to indemnify and hold harmless these parties from any claims or liabilities arising from or related to the DIP Facility or the pre-petition credit facilities.
36. These Release Provisions are objectionable because they would effectively bar the estate, the Committee, and individual creditors from pursuing potential avoidance actions, lender liability claims, equitable subordination claims, breach of fiduciary duty claims, fraudulent transfer claims, or other causes of action against Ridgeline National Bank, N.A. and its affiliates and related parties. The scope of the proposed releases is sweeping: by their terms, the releases would cover not only claims arising from the DIP Facility itself but also claims arising from or relating to the pre-petition credit facilities. This breadth is particularly concerning given the significant issues that the Committee has identified for investigation, including:
(a) Whether the 2019 leveraged buyout, in which Pinecrest Equity Partners III, LP contributed approximately $740 million in equity and financed the approximately $1.36 billion balance through secured debt, may have left the Debtor inadequately capitalized and constituted a constructive fraudulent transfer;
(b) Whether any dividend recapitalizations or distributions to equity holders following the 2019 leveraged buyout may constitute avoidable transfers under sections 544, 548, or 550 of the Bankruptcy Code;
(c) Whether the pre-petition first lien lenders, including Ridgeline National Bank, N.A. in its capacity as administrative agent, engaged in conduct that could give rise to equitable subordination claims under section 510(c) of the Bankruptcy Code;
(d) Whether the pre-petition liens were properly perfected and are subject to challenge under applicable state law or the Bankruptcy Code; and
(e) Whether any insider transactions, related-party dealings, or preferential transfers occurred in the period preceding the Petition Date.
37. The concern regarding the Release Provisions is heightened by the dual role of Ridgeline National Bank, N.A. in this case. Ridgeline served as the administrative agent for the pre-petition first lien credit facilities, with approximately $814 million in first lien debt outstanding as of the Petition Date. Ridgeline is now serving as the DIP Agent for the proposed DIP Facility. This dual role creates an inherent conflict of interest and underscores the need for the Committee to conduct a thorough and independent investigation of the pre-petition lending relationship before any releases are granted. The Release Provisions, as currently drafted, would foreclose this investigation by releasing Ridgeline and its affiliates before the Committee has even completed its retention of professionals.
38. The Committee was appointed only on October 28, 2025 — two weeks after the Petition Date — and has not yet had a meaningful opportunity to investigate potential estate claims against the pre-petition lenders or the Debtor's equity sponsor, Pinecrest Equity Group and its affiliates. Applications to retain the Committee's counsel, Garvey & Holbrook LLP, and financial advisor, Broadleaf Advisory Group LLC, remain pending before this Court. It would be fundamentally unfair and prejudicial to the estate and its creditors to approve broad releases of the pre-petition lenders at this early stage of the case, before the Committee's professionals have had any opportunity to review documents, conduct examinations, or assess the merits of potential claims.
39. Requested Relief. Meridian respectfully requests that all release provisions in the Final DIP Order be subject to a meaningful challenge period and explicitly preserve the right of the estate, the Committee, and individual creditors to investigate and prosecute claims against the pre-petition lenders and their affiliates, including Ridgeline National Bank, N.A., Pinecrest Equity Group and its affiliated funds (including Pinecrest Equity Partners III, LP), and any other parties that may be subject to estate claims. Specifically, the Final DIP Order should provide that:
(i) No releases shall be effective with respect to claims or causes of action arising out of or relating to the pre-petition credit facilities or the pre-petition period until the expiration of a challenge period of no less than seventy-five (75) days from the date on which the Committee's professionals are authorized to commence their investigation;
(ii) The releases, to the extent approved, shall not cover claims for gross negligence, willful misconduct, fraud, or bad faith;
(iii) The indemnification provisions shall not require the estate to indemnify any released party for losses arising from the released party's own gross negligence, willful misconduct, fraud, or bad faith; and
(iv) The releases and indemnification provisions shall be without prejudice to the rights of the Committee or any other party in interest to seek modification or revocation of the releases upon a showing of cause.
D. Milestones and Budget Constraints Unduly Limit Investigation of Alternative Transactions
40. The proposed DIP Facility imposes aggressive case milestones (the "Milestones") that govern the pace and direction of the Chapter 11 case. These Milestones include, among other things, deadlines for the filing of a plan of reorganization or the commencement of a section 363 sale process, deadlines for obtaining Court approval of key case milestones, and strict budget compliance covenants that require the Debtor to operate within a court-approved budget, subject to limited permitted variances.
41. While Meridian acknowledges that reasonable milestones can serve a legitimate purpose in ensuring that Chapter 11 cases proceed in a timely and efficient manner, the Milestones proposed in this case go beyond what is reasonable and effectively give the DIP Lender — Ridgeline National Bank, N.A. — undue control over the pace and direction of the restructuring process. This control comes at the expense of the Debtor's ability to maximize the value of the estate and the Committee's ability to fulfill its statutory obligations under section 1103 of the Bankruptcy Code.
42. Specifically, the Milestones and budget constraints limit the Debtor's and the Committee's ability to:
(i) Investigate the Debtor's pre-petition transactions, including the 2019 leveraged buyout and any subsequent dividend recapitalizations or distributions to equity holders that may constitute avoidable transfers;
(ii) Pursue alternative restructuring proposals, competing DIP financing, or competing bids for the Debtor's assets that could yield higher recoveries for unsecured creditors;
(iii) Negotiate plan terms that maximize recoveries for all stakeholders, including unsecured creditors, rather than terms that are predetermined by the secured lenders; and
(iv) Conduct the due diligence and analysis necessary to evaluate the merits of potential estate claims against the pre-petition lenders and the Debtor's equity sponsor.
43. The DIP maturity — the earliest of twelve (12) months from the date of entry of the Final DIP Order, the effective date of a plan of reorganization, or the consummation of a section 363 sale — combined with the tight Milestones, creates an artificially compressed timeline that benefits the secured lenders at the expense of unsecured creditors. The secured lenders have every incentive to drive toward a quick resolution that protects their claims and minimizes the time available for the Committee to investigate and assert estate claims. Unsecured creditors, by contrast, benefit from a process that allows sufficient time for a thorough investigation of the pre-petition transactions and a fair evaluation of all available restructuring alternatives.
44. Additionally, the budget constraints may not adequately fund the Committee's professional fees and expenses necessary to fulfill its statutory role. The Committee has retained, subject to Court approval, Garvey & Holbrook LLP as counsel and Broadleaf Advisory Group LLC (Robert Tanaka, managing director) as financial advisor. The Committee's professionals will require adequate funding to conduct their investigation, participate in plan negotiations, evaluate potential transactions, and otherwise discharge their fiduciary duties to the unsecured creditor constituency. A DIP budget that does not provide sufficient funding for the Committee's professionals effectively undermines the Committee's statutory role and deprives unsecured creditors of the representation to which they are entitled under the Bankruptcy Code.
45. Requested Relief. Meridian respectfully requests that the Final DIP Order include the following modifications to the Milestones and budget constraints:
(i) Extension of the case milestones to provide at least ninety (90) days from the date on which the Committee's professionals are authorized to commence their investigation before any plan filing deadline or sale process commencement deadline;
(ii) Inclusion of a professional fee carve-out of no less than $4,500,000 for Committee professionals, inclusive of fees and expenses for the Committee's counsel and financial advisor, which carve-out shall not be subject to reduction or elimination by the DIP Lender without further order of this Court;
(iii) A requirement that the DIP Lender consent (such consent not to be unreasonably withheld, conditioned, or delayed) to budget modifications reasonably necessary to fund estate-value-maximizing investigations, including investigations of potential avoidance actions, lender liability claims, and other estate causes of action;
(iv) Preservation of the Committee's right to seek approval of alternative DIP financing or to propose competing transactions, including the right to market the DIP opportunity to third-party lenders without interference from the existing DIP Lender; and
(v) A requirement that any termination of the DIP Facility by the DIP Lender based on a milestone default be subject to notice and a hearing before this Court, with the Debtor and the Committee having the right to be heard on the propriety of any such termination.
IV. RESERVATION OF RIGHTS
46. Meridian Consumer Brands LLC expressly reserves all of its rights, claims, and defenses, including but not limited to:
(a) Its pre-petition trade receivable claim of $14,726,418.37 across eighty-three (83) unpaid invoices, and all rights to assert, prove, and collect such claim in full;
(b) Its section 503(b)(9) administrative expense claim of $1,847,200.00 for goods received by the Debtor in the ordinary course of the Debtor's business within twenty (20) days before the Petition Date;
(c) Its reclamation rights under section 546(c) of the Bankruptcy Code for approximately $3,218,650.00 in goods delivered to the Debtor within forty-five (45) days before the Petition Date;
(d) Its right to assert all available defenses to any preference action that may be commenced against Meridian under section 547 of the Bankruptcy Code, including without limitation the ordinary course of business defense under section 547(c)(2), the contemporaneous exchange defense under section 547(c)(1), the new value defense under section 547(c)(4), and any other defense available under applicable law;
(e) Its rights as a duly appointed member of the Official Committee of Unsecured Creditors, including all rights arising under sections 1102 and 1103 of the Bankruptcy Code;
(f) Its rights under its trade credit insurance policy with Clearwater Surety & Insurance Co. (Policy No. TCI-2024-00783), including the right to make claims thereunder and to receive insurance proceeds without setoff, deduction, or other impairment;
(g) Its right to object to any plan of reorganization or disclosure statement that does not provide adequate recovery to unsecured creditors;
(h) Its right to participate in any sale process conducted under section 363 of the Bankruptcy Code, including the right to object to the terms of any proposed sale, to submit qualifying bids, and to participate in any auction;
(i) Its right to seek relief from the automatic stay under section 362 of the Bankruptcy Code if appropriate circumstances arise;
(j) Its right to assert setoff rights under section 553 of the Bankruptcy Code; and
(k) All other rights, claims, and defenses available to Meridian under the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, and applicable nonbankruptcy law.
47. Meridian further reserves the right to supplement this Objection and to present additional evidence and argument at the Final DIP Hearing scheduled for November 14, 2025, or at any subsequent hearing. Meridian's professionals are continuing their review of the DIP Facility documents, the Debtor's pre-petition financial records, and other materials relevant to the issues raised herein. Meridian reserves the right to raise additional objections or modify the relief requested herein based on its ongoing review.
48. Nothing in this Objection shall be construed as a waiver of any of Meridian's rights as a creditor, a member of the Committee, or otherwise. Nothing herein shall be deemed an acknowledgment of the validity, extent, priority, or perfection of the DIP Lender's or the pre-petition secured lenders' liens, claims, or security interests, all of which remain subject to investigation by the Committee and challenge by appropriate parties in interest.
V. CONCLUSION AND REQUESTED RELIEF
WHEREFORE, for the foregoing reasons, Meridian Consumer Brands LLC respectfully requests that this Court:
1. Deny or modify the $125 million Roll-Up provision of the DIP Facility, either by eliminating the Roll-Up in its entirety or by conditioning the Roll-Up on appropriate protections for the estate and unsecured creditors, including a meaningful challenge period;
2. Include adequate protections for unsecured creditors in the Final DIP Order, including a specific reserve for payment of allowed section 503(b)(9) administrative expense claims, a carve-out for critical vendor payments approved by the Court, and a sufficient professional fee carve-out for the Committee and its professionals;
3. Strike or materially limit the release and indemnification provisions to preserve estate causes of action, provide a meaningful challenge period of no less than seventy-five (75) days, and ensure that the Committee and other parties in interest retain the ability to investigate and prosecute claims against the pre-petition lenders, the DIP Agent, and their respective affiliates;
4. Modify the case milestones and budget constraints to provide the Debtor and the Committee adequate time and resources to investigate pre-petition transactions, pursue value-maximizing alternatives, and fulfill their respective obligations under the Bankruptcy Code; and
5. Grant such other and further relief as the Court deems just and proper.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Colette Whitman (Del. Bar No. 5847) Nathaniel Bower (Del. Bar No. 6193) Nathan Ikeda (Del. Bar No. 6512) Gabrielle Moss (Del. Bar No. 6734)
200 Park Avenue, 38th Floor New York, New York 10166 Telephone: (212) 555-4000 Facsimile: (212) 555-4001
— and —
1105 N. Market Street, Suite 1400 Wilmington, Delaware 19801 Telephone: (302) 555-7800 Facsimile: (302) 555-7801
Counsel for Meridian Consumer Brands LLC
Dated: November __, 2025 Wilmington, Delaware
CERTIFICATE OF SERVICE
I, Nathan Ikeda, hereby certify that on November __, 2025, a true and correct copy of the foregoing Limited Objection and Reservation of Rights of Meridian Consumer Brands LLC to Debtor's Motion for Approval of Debtor-in-Possession Financing was served via the Court's CM/ECF system on all parties registered to receive electronic notices in this case, and by electronic mail and/or first-class mail, postage prepaid, on the following parties:
1. Brindoval Baines & Lord LLP
Attn: Harrison Caldwell
51 West 52nd Street New York, New York 10019 Counsel for the Debtor
2. Borwick Sato LLP
Attn: Michael Donnelly
919 N. Market Street, Suite 600 Wilmington, Delaware 19801 Delaware Co-Counsel for the Debtor
3. Ridgeline National Bank, N.A.
Attn: Laura Chin, Workout Officer
600 Travis Street Houston, Texas 77002 DIP Agent and Pre-Petition First Lien Administrative Agent
4. Garvey & Holbrook LLP
Attn: Diana Prescott
750 Third Avenue, 30th Floor New York, New York 10017 Counsel for the Official Committee of Unsecured Creditors
5. Broadleaf Advisory Group LLC
Attn: Robert Tanaka, Managing Director
1345 Avenue of the Americas, 25th Floor New York, New York 10105 Financial Advisor to the Official Committee of Unsecured Creditors
6. Ashworth Partners LLC
Attn: Sandra Ng, Lead Managing Director
399 Park Avenue, 12th Floor New York, New York 10022 Financial Advisor and Investment Banker to the Debtor
7. Thornfield Capital Management LP
Attn: Alan Reeves, Portfolio Manager
9 West 57th Street, 34th Floor New York, New York 10019 Pre-Petition Second Lien Administrative Agent
8. Pacific Continental Trust Company
101 Barclay Street, 7th Floor New York, New York 10286 Indenture Trustee for 8.75% Senior Unsecured Notes due 2027
9. Office of the United States Trustee, Region 3
844 King Street, Suite 2207 Wilmington, Delaware 19801
10. All other parties requesting notice pursuant to Federal Rule of Bankruptcy Procedure 2002.
________________________________________
Nathan Ikeda (Del. Bar No. 6512) CALDERWOOD & HARKNESS LLP 1105 N. Market Street, Suite 1400 Wilmington, Delaware 19801 Telephone: (302) 555-7800
In re: | Chapter 11
CASCADIA HOME & LIFESTYLE INC., | Case No. 25-12087 (CMA)
Debtor.¹ | Hon. Christine M. Aldridge
Related Docket No.: [Dkt. No. __]

UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELAWARE

I. PRELIMINARY STATEMENT

II. BACKGROUND

III. OBJECTION

IV. RESERVATION OF RIGHTS

V. CONCLUSION AND REQUESTED RELIEF

CALDERWOOD & HARKNESS LLP

CERTIFICATE OF SERVICE

Record

Parties

Dates

Amounts